They often maintain offices in the United States. Examples of indirect exporting include: Image courtesy of Wikimedia, http: For example, if volumes are expected to be low initially, then setting up your own manufacturing facility would not be appropriate.
Process Involves one time transfer of property or rights. An equity-based venture could be wholly-owned by the parent international company, or it could be a joint venture in which the international company shares it ownership with another company.
Disadvantages center on problems of quality control of distant franchisees. Joint ventures allow the partners to share capital and risks.
First of all, Tommy Hilfiger has to be very specific in its licensing agreement. They offer a whole range of bespoke or a la carte services to exporting organizations. KFC owned 51 percent of the venture; having more than half of the operation was advantageous in case disagreements arose.
When the executives in charge of a firm decide to enter a new country, they must decide how to enter the country. Licensing and Franchising With the exception of technology licensing, which is in widespread use, licensing is a tactic often used to enter foreign markets that may not be attractive otherwise: Exporting also allows you to concentrate your production in a single location, allowing for better economies of scale and quality control measures.
Starbucks may also expand internationally through franchising as well as through wholly-owned operations.
This arrangement worked well for a small business exporter from Virginia: The direct approach involves more expense and detail than the indirect method. You also will gain local market knowledge and be able to adapt products and services to the needs of local consumers.
However, it does offer more in the way of control and management of the business. Executives at KFC saw China as an attractive country because chicken is a key element of Chinese diets. Better local market intelligence provided by indigenous joint venture partner. If you are unable to do this in-house, use a credit reporting firm.
However, sharing technological know-how with foreign companies is a bit riskier for technology-based companies. Tommy Hilfiger should thoroughly investigate the quality and reputation of the Arvind Group.
They date back to an imperialist past that some nations might prefer to forget e. Please allow 5 to 10 days for delivery. Any other mode would not realize full the value of these assets. However, it is finding overseas expansion difficult.
Businesses may have to use different market entry methods for different countries i. A detailed list of issues pertaining to the buildings, equipment and supplies terms 4. Be careful that the agreement does not violate host country antitrust laws. Non-equity ventures involve the host country partner in the arrangement with a greater percentage.
Published by Tim Friesner Marketing Teacher designs and delivers online marketing courses, training and resources for marketing learners, teachers and professionals. This lesson considers a number of key alternatives, but recognizes that alternatives are many and diverse.
In the late s, China was a difficult market for American businesses to enter. The most attractive foreign markets tend to be found in politically stable developed and developing nations that have free market systems and where there is not a dramatic upsurge in either inflation rates or private-sector debt.
Why might joint ventures dissolve so quickly? In addition, it does not have local market knowledge which the joint venture partner brings. Legal and Tax Implications Much of the decision-making surrounding joint venture or off-shore manufacturing involves legal and tax issues.
Finally, there could be problems in royalty payments. Or, Arvind Mills could be required to submit samples of production runs to Tommy Hilfiger for approval. Exercises Do you believe that KFC would have been so successful in China today if executives had tried to make their first store a wholly owned subsidiary?
In addition to pre-investment assistance, OPIC provides financing to assist in the setup of overseas operations and risk insurance to mitigate some of the problems associated with investment in developing countries.
Foreign Governments Foreign governments, particularly in developing countries, often sponsor special agencies to aid and facilitate foreign direct investment. This chapter made the following points: · In this chapter, we discussed the various modes of entry into a foreign market-Exporting, Turnkey Projects, Licensing, Franchising, Joint Ventures and Wholly-Owned Subsidiaries and Strategic calgaryrefugeehealth.com of Multinational.
The practice of each of the entry modes (exporting, licensing, franchising, contract manufacturing, strategic alliances, joint ventures and foreign directt investment) please provide example for each entry strategy done by each local company and international company * Exporting The home company exports their product to host country company calgaryrefugeehealth.com · •Explain the characteristics of international licensing, international franchising, and other important contract-based intermediate modes.
•Understand the difference between strategic alliances and joint calgaryrefugeehealth.com://calgaryrefugeehealth.com?id= Strategies for Reaching Global Markets • Licensing, exporting, franchising, contract manufacturing, making international joint ventures and strategic alliances, and engaging in foreign direct investment.
· Strategic Alliances and Joint Ventures. Through international contract manufacturing, There are four common ways for a firm to expand its operations into overseas markets: importing, exporting, licensing, and franchising.
First, explain what each approach entails. Then, select the one that you’d use if you were the CEO of a large calgaryrefugeehealth.com /calgaryrefugeehealth.com 3.
Exporting 4. Licensing 5. Franchising 6. Contract Manufacturing 7. Joint Ventures Strategic Alliances Timing of Entry Exit Strategies 2 Introduction The need for a solid market entry decision is an integral part of a global market entry calgaryrefugeehealth.com://calgaryrefugeehealth.comDownload